This document discusses concepts of lean production and just-in-time (JIT) systems. It outlines that JIT began in Japan in the 1970s in response to an oil crisis, with a focus on reducing waste. Key aspects of lean/JIT discussed include the Kanban system using cards to trigger production, reducing inventory and uncertainties. The document provides an example calculating the size and number of Kanban containers needed based on production data. It concludes that while Kanban uses a pull system, master scheduling still plays a role to effectively plan at the front end.

1. PRODUCTION PLANNING AND
CONTROL
BNM30803
Dr. Tengku Nur Azila binti Raja Mamat
2.A1.4.031
nurazila@uthm.edu.my
012-9848329

2. CHAPTER 8
LEAN PRODUCTION AND JUST-IN-TIME (JIT)

3. OUTLINE
8.1 Concepts of Lean Production System and Just-
in-time (JIT)
8.2 Impact on Capacity
8.3 The Pull System
8.4 Kanban System for Process Improvement
8.5 Master Scheduling and Lean Production

4. 8.1 Concepts of Lean Production System and
Just-in-time (JIT)
• The just-in-time (JIT) movement
started in Japan (primarily Toyota
Motor Company) in the mid-1970s as
a response to the worldwide oil crisis
earlier in that decade.
• Today they have evolved into what is
often called lean production.

5. 8.1 Concepts of Lean Production System and
Just-in-time (JIT)
• The focus on waste reduction of the original
approach to JIT went well beyond the energy
shortages that served as a catalyst for its
development. Waste exists due to uncertainty in
the following:-
– Market conditions
– Quality problems
– Design changes
– Mistakes
– Inaccurate database
– Equipment problems
– Workforce problems
– Supplier problems

6. 8.1 Concepts of Lean Production System and
Just-in-time (JIT)
• The focus on inventory reduction, however, turns into
another problem such as:-
– Expediting activities and costs increase.
– Premium freight shipments from suppliers increase.
– Split production lots causing excessive setups.
– Poor efficiency and utilization measures caused by
shortages.
– Problem of stockout conditions.
• Few new concepts emerged to deal with the
uncertainties:
– Direct reduction of waste.
– Reduction in process uncertainties that cause waste,
usually as a buffer.
– Finding more effective methods to cope with process
uncertainties that cannot be eliminated.

7. 8.1 Concepts of Lean Production System and
Just-in-time (JIT)
• Examples of approach used in JIT or lean:-
– Total quality management; reduce waste of poor quality,
reduce need for buffer inventory "just in case" the
quality was bad on some product (eased uncertainty).
– Participative management; more motivated workforce,
employee involvement, more flexibility (increased ability
to cope with uncertainties that remain).
– Increased emphasis on preventive maintenance; better
assurance of equipment availability; better, more
consistent quality of production (eased uncertainty,
reduced waste).
– Increased worker training; flexibility of workers, better
quality, improved worker morale (reduced waste and
eased uncertainty).

8. 8.2 Impact on Capacity
• In a lean production system where inventory is reduced,
the producer tends to have to manage capacity
requirements more in "real time" since they don't have the
luxury of having stored capacity in the form of inventory.
• degree of uncertainty; even try to control. Since there is
little inventory to respond to those uncertain demands, it is
important that there is buffer inventory available to produce
product for that demand
• need to be carefully planned and should be recognized as
one of the costs of having an effective JIT program.

9. 8.3 The Pull System
• MRP is often called a push system, meaning that the material
needs are calculated ahead of time (planned order releases)
and, assuming there are no significant changes to the plans,
the plan is pushed out to the production system in the form of
a production order.
• The trigger for the entire plan is the projection of the final
product need, as represented by the master production
schedule (MPS). Part of the difficulty with MRP is that many
times the plans are not effective because of problems or
changes, including:
– Changes in customer requirements, both in timing and quantity.
– Supplier delivery problems, including timing, quantity, and quality.
– Inaccurate databases that can make the plans invalid, depending on the
nature of the inaccurate data.
– Production problems, including:
• Absenteeism in the workforce
• Productivity and/or efficiency problems
• Machine downtime
• Quality problems
• Poor communication

10. 8.3 The Pull System
• The pull system was developed as an alternative to classical
push MRP.
• The underlying concept is to not pre-plan and generate
schedules, but instead to react to the final customer order
or downstream operation needs and produce only what is
needed to satisfy demand and then only when it is needed.
• Essentially, this system is much the same as the basic
reorder point system used for independent inventory.

11. 8.3 The Pull System
Example 1
Bicycle
200
units/batch
Bicycle
seat
Lot size=300
Lead time=2 weeks
ROP=80

12. 8.3 The Pull System
Example 1
Situation 1:

13. 8.3 The Pull System
Example 1
Situation 1:
long lead times,
major targets of lean
production waste
reduction.
SEAT IN INVENTORY : 290
BICYCLE ORDER QTY : 200
SAFETY STOCK : 80
LEAD TIME : 2 weeks
300
250
200
150
100
50
300
250
200
150
100
50
Safety stock

14. 8.3 The Pull System
Example 1
Situation 2:

15. 8.3 The Pull System
Example 1
Situation 2:
Large lot sizes,
major targets of lean
production waste
reduction.
SEAT IN INVENTORY : 270
BICYCLE ORDER QTY : 200
SAFETY STOCK : 80
LEAD TIME : 2 weeks
50
300
250
200
150
100
50
Safety stock
300
250
200
150
100

16. 8.4 Kanban System for Process
Improvement
• With shortened lead times a constant goal in JIT, a system
is needed to generate the reorder point signal without
having to rely on a formal, structured system that could
take time to react. Instead the developers of the JIT
concept utilized a simple card system called "Kanban,"
which roughly translated from Japanese means "card" or
"ticket.“
• The system works very simple. The Kanban signal (often
merely a piece of cardboard) identifies the material to
which it is attached. The information on the Kanban will
often include:
– Component part number and identification
– Storage location
– Container size (if the material is stored in a container)
– Work center (or supplier) of origin

17. 8.4 Kanban System for Process
Improvement
 Part Name
 Part No
 Quantity
 Name of supplier
 Production line

18. 8.4 Kanban System for Process
Improvement
• 2 major types of Kanban system:
1. The system requires for returning a container to the previous
process to trigger production.
Kanban container / bin system
1. Work in a similar way to the bin system, but instead of returning a
container to the previous process to trigger production, a card is
returned
2. It is often a card or label being pasted on a container from an
external supplier or from internal order or process
Kanban card system

19. 8.4 Kanban System for Process
Improvement
• The most popular Kanban system is called ….
2-Bin Kanban System
2 containers of parts are
held within the
production area
The production process
utilizes the components
within the 1st bin until it
is empty
then start using the 2nd
bin
and return the empty to
the stores or the
previous operation for
replacement

20. 8.4 Kanban System for Process
Improvement
• Kanban Rules:
– Every container with parts shall have one, but only one,
Kanban
– There will be no partial containers stored
• Every container will be filled, empty, or in the process of being
filled or emptied. This rule makes inventory accounting easy. You
don't need to count parts, but only count containers and then
multiply by the container quantity.
– There will be no production or movement without an
authorization in the form of an unattached Kanban card
– Later process tells earlier process what is required,
earlier process produces what later process needs
– Defects are not passed on to the next stage

21. 8.4 Kanban System for Process
Improvement
• How many Kanban bin/card needed??
– The number of Kanban bin/card sets the
amount of authorized inventory
– The size of each bin should be decided at the
beginning in order to determine the number of
bin/card
– This could be done by computing:-
• Lot size
• Lead time needed (to produce a container of parts)
• Amount of safety stock needed (to account for
variability or uncertainty in the system)

22. • How many Kanban bin/card needed??
1) Size of Kanban bin, Qp
=
2
(1 − )
- D: Annual demand
- S: Setup cost
- H: Holding cost
- d: daily demand
- p: daily production
8.4 Kanban System for Process
Improvement

23. • How many Kanban bin/card needed??
2) Number of Kanban bin/card
=
+
=
- MLT: Manufacturing lead time
8.4 Kanban System for Process
Improvement

24. 8.4 Kanban System for Process
Improvement
Example 2:
MIE Components Sdn Bhd produces short runs of scanner connectors for
defence industry. The owner of the company is trying to introduce the concept
of lean manufacturing on one of its assembly lines. His intention is to
implement the just in time system through Kanban using container to reduce
the inventory level. The details of the production data for scanner connectors in
the assembly line are inclusive of setup cost RM10, holding cost RM100 (per
unit per year), daily production 200 units of scanner connectors (per day),
annual demand 25,000 units (with usage of 100 units/day), manufacturing lead
time 3 days, and safety stock ½ day’s of production.
a) Determine the size of the Kanban container
b) Compute the number of Kanban container needed

25. 8.4 Kanban System for Process
Improvement
S=RM10
H=RM100
D=25,000
d=100
p=200
MLT=3 days
safety stock=1/2 prod.
Qp=sqrt[(2x25,000x10)/(100(1-100/200))]
=sqrt[500,000/50]
=100units

26. 8.4 Kanban System for Process
Improvement
Answer:
a) Determine the size of the Kanban container  Qp = 100 units
b) Compute the number of Kanban container needed  4 units

27. 8.5 Master Scheduling and Lean Production
• The basic rule here that lean production tries to address:
whenever you produce at a different rate than you sell, you
must be using inventory. Lean production, on the other hand,
tries to produce at the same rate that product is sold.
• One overall message must be emphasized here. Even though
Kanban (a pull system) is used, the "front end" of a planning
and control system (a push system) must still be used
effectively.
• Many people thought that Kanban was so different from MRP
that the choice was clearly one or the other, but not both.
Kanban is, of course, based on reaction and therefore "pulls"
material based on usage in upstream processes. MRP, on the
other hand, is forward looking and plans usage, thereby
"pushing" material out to the processes in anticipation of near-
term need. As people became more comfortable with
understanding systems, however, there came a realization that
the two can be used together to obtain an overall effective
operation.

28. # h a r m o n i f t k